The Minority Bank Deposit Program

The Saint Lawrence Seaway Development Corporation's participation in the minority bank program, which seeks to increase federal funds deposited with minority banks, was not accompanied by sound cash management practices. The Corporation acquired certificates of deposit from minority banks at interest rates lower than those given to the general public. In acquiring the certificates, the Corporation did not request the prevailing interest rates, did not get bids from all banks participating in the minority bank program, and did not attempt to acquire longer term certificates of deposit at higher interest rates when feasible. Although steps are being taken to clarify practices for depositing federal funds in minority banks, no action is being taken or contemplated involving the use of investment funds such as that made by the Saint Lawrence Seaway Development Corporation. There has been no guidance on the use of investment funds apparently because the Department of the Treasury has no authority to direct agencies to invest funds in minority banks or to accept any particular interest rate.